Another Summit, The Same Problem?

Upon landing in Toronto Saturday I could already see it: The G20 heads of states are in town and their modest means of transportation were neatly parked at Pearson International Airport: Obama's Air Force One, Two Jumbojets each for the Chinese, Japanese and Saudi-Arabian Heads of state, Merkel's and Sarkozy's relatively modest Airbuses, and – how cute – the Virgin Atlantic A340 which must have shipped the new British PM Cameron to TO. Telling array of status symbols...
It looked somewhat different in downtown Toronto. The entire centre, where the convention place for the G20 is located, was fenced off with a 3m high wall – reminding me of my childhood playing next to the Berlin Wall. There was a sizable number of protesters out there – but many thousands more of police. The city was a fortress.
The G20 is another 'tool' of global governance, similar to the Global Compact. But while the Compact receives only scant attention from the public, the G20 is a major event. It leaves you wondering. For me this reflects, once more, the value and benefits of the UN Global Compact. And indeed also the value of the Summit.
Reflecting back, it is chiefly about two things. The first is to legitimize the social role and responsibility of business within the business community. By getting 8,000 players on board, many of them well known brands, the issues of sustainability/CSR/Ethics are now a legitimate concern in the wider business discourse. Of course there is room for ambiguity about individual companies, their achievements and sincerity. But for me the glass is definitely half full. It is mostly about initiating a process, rather than the concrete outcomes, which we should credit the UN Global Compact for. Andreas Rasche (together with Georg Kell) has just published a fine book on the compact taking stock of its achievements and shortcomings. My colleagues and friends Andreas Scherer and Guido Palazzo describe it well in the book: the Global Compact is one tool of global governance, providing a framework for deliberation and learning around the social role of business in a global economy.
The second point for me is that in particular the summit has very much a ritualistic role. As humans, we need rituals and ceremony to visualize, materialize and provide a cognitive frame to inner processes of commitment, of attitudes and thoughts. This is what weddings, funerals, graduation ceremonies etc. are all about. The summit provides such a frame. The leading persons of organizations attend (in fact a third of attendees in my count were actually top brass), make statements of commitment or achievement, are together in the room, and do so under the auspices of the highest formal political authority on the globe: the UN Secretary General. That is one of the reasons Ban-Ki Moon's remarkable commitment to the Compact is vital.
Contrasting this to the G20 and its outcomes here should make Georg Kell and his team a little proud of what they have achieved. At the G20, leaders have basically decided to land large chunks of their middle class constituents with the burden of the debt, countries had to take on in saving the global financial system. To halve the debts by 2013 boils down to little else. No wonder such an agenda needs fences and thousands of police to be sustained. The level of 'stationary violence' by the state in Toronto this weekend in my modest view was much bigger than the few incidents of vandalism by protestors – as much as we condemn this violence. The G20 is an example of lack of deliberation and democracy at the global level. The UN Global Compact Summit points to the opposite: smaller or bigger steps towards common solutions to pressing issues on the global level.
That is why I think it was worth it.

The Elephant in the Room

For the past two and half days I've felt a strange tension in this conference. It is about the thorny question of whether ethics pays. The business case for CSR. The harmony between economic, social and ecological sustainability.

Most of the time panellists and speakers were hammering it home that joining the UN Global Compact and implementing the principles just makes good business sense. I had a very lively conversation with Peter Solmssen, Executive VP of Siemens about this, who joined the company recently as part of the revamp of the board in the aftermath of the corruption scandals. He was fairly bullish that fighting corruption makes good business sense, 'we are more profitable now' he argued. He argued that in most countries big conglomerates like Siemens or General Electric are doing business with public purchasers who at the top level are not interested in corruption, and that companies who are known for not engaging in it, in fact have a competitive advantage. His view is that big players have indeed the chance of forming a 'cartel of the good' to collaborate on addressing ethical issues like corruption – and be the better off with it.

A similar take I got from talking to Gustavo Grobocopatel, President of Grupo Losgrobo from Argentina. His company works in agriculture and adjacent supplies and services, and he sees the particular value for his organization in engaging with the UN Global Compact in improved stakeholder relations. In particular his customers value this inclusive approach and for him CSR is very much about competitive advantage. His organization is particular interesting as it tries to keep more of the value chain of agricultural products in the country, rather than just exporting commodities and falling victim to what is commonly referred to as 'Dutch disease'.

In some ways then it was quite a little 'scratch' (I mentioned my Teflon-ized ears) to hear Klaus Leisinger (President and CEO of the Novartis Foundation for Sustainable Development) say on Friday morning that the talk of 'ethics pays' or 'ethics is just good business' is – in his words – just 'bullshit'. Why, he argued, would companies not do the right thing anyway if it were just good business? Instead he called for a commitment to basic values, brought forward in the 'Manifesto for Global Economic Ethics', by companies a priori, simply because it is morally right, as in some cases it might even cost money in the short term.

I tend to agree with this. Again, we can turn to the ten year old-metaphor: at this age, kids are at the 'conventional' level of moral development (in Kohlberg's theory): they do right and avoid wrong, because mommy and daddy say so and he tries to be a nice boy, and he tries to avoid the smack on the back or wants to get that ice cream as a reward. At least on the rhetorical level, the UN Global Compact members – by and large - seem to be not much beyond the conventional level. Which – don't get me wrong – is quite an achievement. Whole societies have survived on that, so that's fine for our birthday boy.

This apparent reluctance to think about the firm beyond the immediate business case became quite clear today in the sessions dealing with Development. I put the question to Jeffrey Sachs, Georg Kell and Chad Holliday in the final press briefing. Kell re-iterated that we are seeing an 'evolutionary transformation', a re-orientation from short- to long-term and a stronger focus on the (financial) risk which non-financial issues can cause. But 'the basic model remains intact', he said. In a similar vein Holliday, who hinted at further economic incentives to internalize sustainability issues, such as pricing carbon. It was then Sachs, who I think took up the question of whether it is time to move beyond the current framework. He said, that providing malaria medications to poor people 'is not a money making venture'. But still he argued that the business contribution to achieving the Millennium Development Goals is vital. So he pointed more at models of shared responsibility and sees business getting much more involved in public-private-partnerships. This was re-iterated by Robert Orr, Assistant Undersecretary General of the UN, who moderated the press briefing. For him the UN Global Compact is very much about becoming/being a player in global governance. He stressed there is hardly no issue on the global political agenda, where business is not part of any possibly thinkable solution. I liked that candour and agree.

Followers of this blog familiar with our writings will know that this is where I see the future of CSR going: Business as a political actor, intricately involved in societal governance. In Kohlberg's model of moral development, this would be the post-conventional level: understanding social contracts and universal moral principles – and doing the right thing based on understanding this. So let's wish our ten year old a healthy further development – there are new stages to discover!

‘Business Schools should be extremely nervous’

One of the benefits of going to big global conferences is that you meet old colleagues and friends. So I was very pleased to bump into Peter Lacy (now Managing Director Accenture, Sustainability Services, Europe, Africa and Latin America). I enjoyed working with Peter while he was Exec. Director at EABIS (an association of businesses and academic institutions to boost CSR in Europe) and built up the organization in the early/mid 2000s.

Peter was here, among other things, to present a Survey on CEO perceptions of the Sustainability topic which I mentioned earlier in another post. I won't bore you with some of the bickering raised here (too small sample of 'converted' companies, CEO rhetoric is no data etc.) since it does not jeopardize the main message of the research: that sustainability is now clearly on the strategic agenda of many major companies and in fact 93% of surveyed CEOs globally see this as a key imperative. No more just an 'issue', a blip on the screen, as it was ten years ago. Though Peter told me, too, that the survey probably just hints at the sheer magnitude of the task ahead, which is implementation. He is a little cautious about some of the statements in the report regarding implementation in these companies as of now, but his main point is well made: what about those non-UNGC members and other companies, who aren't even yet in the strategic stage?
Since Peter knows both worlds, business and academia, I was also interested in his view on what the survey means for us in the ivory tower. Two things emerge. Since one of the findings was, that the investment community cares next to nothing about sustainability, Peter thinks we need to develop tools to make the actual value of sustainability more explicit. This is closely related to performance management as – given current business practices – only if I can give sustainability as a measurable task to my crew, I can reward and assess them on success.
But the main point he made was that in his view, business schools in general have not even entered the first 'issue' stage and are lagging behind their main target audience by – mas o menos- a decade. Of course, he hastened to add - that he is aware that there are a good number of schools out there which have understood the challenge and are able to provide education of managers with regard to sustainability issues. But personally I could not agree more that by and large, business schools are still largely operating within an agency-, efficient markets- and shareholder value-framework. This applies certainly to many of the top North American and European schools. And while this is bad enough I would add that this thinking is still dominating our research by and large – and today's research is the teaching material ten years from now, as Peter put it. He added that from his current work of running a department of 800 staff, in recruitment he finds precious few candidates trained by business schools in sustainability. So Peter's message was that business schools really need to take into account the changing imperatives for business – otherwise business might more and more look for other sources of education (something which came already up in an earlier post).

A cloud of well known words with some rays of sunshine

This morning the Summit opened. It was a well organized and well choreographed session. Our ten year old is a well behaved boy indeed (sorry for masculin-izing the UNGC, I just go by the blue colour of the UN...).

Ban-Ki Moon opened, followed by a number of panellists and it were the usual, well meaning speeches by many leaders in business, and civil society. Moon announced the goal of raising the membership from currently 8,000 to 20,000 by 2020. Bloomberg ventured to step out of his role as Mayor and into that of a concerned citizen by pointing to two of the major challenges for future sustainability: 1bn deaths due to tobacco consumption over the next decade, and a similar level of road fatalities, given the current trends in automotive growth. These were quite daunting, but nevertheless refreshing new angles on the issues.



Maybe i am hanging out too much on conferences that my ears are by now a bit teflonized for much of the sustainability rhetoric. But reflecting back on this opening session, I feel quite good about the UNGC. It has certainly changed the game for many of the companies involved, most of them – which I did not know – are in fact SMEs.



So the ten year old gives us some reason for pride and satisfaction. But you keep wondering if the bigger worry in fact are not those little friends of our laureate who he hangs out with. In other words, the biggest worry still are those companies who haven't even signed up (or the 1,300 which had to be expelled). I think this aspect highlights the magnitude of the underlying issue and in fact one reason why what has been achieved by the GC is undeniably a success.



I liked Philip Jennings, the General Secretary of the gobal federation of trade unions (UNI Global Union). He highlighted the persistent plight of the trade union movement and the apparent tensions between a company publishing all sort of niceties on employees in their CSR report while at the same time busting their unionized workers. Point well made.



The agenda for the future was probably best put by John Ruggie (Harvard University) in the afternoon plenary, posing that the era of 'declaratory CSR is over' and companies now have to 'know and show' concrete progress. He argued that sustainability, as suggested in the new Blueprint for Corporate Sustainability Leadership is not a 'technocratic fix' but rather an active engagement with stakeholders in concrete situations. This new Blueprint is probably becoming a rather influential tool in the future, the Director General of the Norwegian Oil Fund pointed out: they will use it as a guideline in talking to companies and aligning their investment decisions on it. It seems to be a step closer to what many businesses are calling for: a more level playing field.

Live Webstreaming of UN Global Compact Summit

See it here: http://www.un.org/webcast/globalcompact/leaderssummit2010/